TP single (84) already taking RMD. TP died Oct. 2015. IN banks paperwork the estate was named beneficiary. Administrator cashed out IRA's and put cash in the estate bank account. Can ADM. use the Sept 30 2016 date to name beneficiaries and pass these on as IRA's for the beneficiaries and set them up as IRA for the beneficiary? The only Estate return being filed will be the 1041. Not sure I quite understand that this can be done since ADM already cashed them out. In addition what happens to the unused basis in the IRA's. Thanks for all the help.
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Based on what you wrote, it's a done deal. The IRA was paid out to the beneficiary ... the Estate. The estate must report the distribution (less the basis in the IRA, if any) on its own tax return. Depending on the amount, this may have been a foolish thing to do ... all at once. If the Estate distributes funds to its benes, in full or in part, then the IRA income (along with the Estate's other income) will flow to the benes and be reported by them on their own tax returns.
It is usually a poor idea to name one's Estate as the bene of his IRA. When that is done, the opportunity is lost to spread the IRA's distribution over the life of the Estate's bene's. Of course, in your case all deferrals were lost when the IRA was cashed out.
The "September-of-the-following-year" option to which you referred doesn't apply in the situation you described. There were options until the administrator cashed out the IRA. When he did that, all other options evaporated.Roland Slugg
"I do what I can." -
I have to concur with Roland's post - Been a year or two ago, and the Decedent's IRA beneficiary was to the Trust/Estate -
Really unfortunate for the 5 beneficiaries as there was no option but to report on Form 1041 via K-1 to each.
SandyComment
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As taxable income, I might add.Comment
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